DHEC sides with Bluffton medical facility

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COLUMBIA — A Bluffton medical facility has survived an initial challenge to its right to acquire new scanning equipment, but a possible appeal by its competitor could send the dispute to court.

On Thursday the S.C. Department of Health and Environmental Control Board denied an appeal from Hilton Head Health System, L.P. The system had contested the agency staff’s decision last month to allow St. Joseph’s/Candler imaging center to purchase and install new equipment without obtaining a coveted — and tightly regulated — “certificate of need.”

The original staff decision on Jan. 9 was based on a $576,000 cost estimate of the new CT scanner, according to agency records. New medical equipment of at least $600,000 requires state permission first.

However, on Jan. 23 Hilton Head Health System, L.P. argued that the cost of its competitor’s new CT scanner exceeded the cost threshold, so the addition should be subject to review and approval of the certificate of need process.

On Friday it was unclear what steps, if any, Hilton Head Health System will take next. Parties that are denied the chance to press their case against the DHEC staff decision before the DHEC Board commonly appeal to the S.C. Administrative Law Court.

“We have just been notified of the decision and are currently reviewing our options,” said Kelly Presnell, spokesperson for Hilton Head Hospital.

The Administrative Law Court and the Court of Appeals can award damages and attorney fees to a party whose project was delayed by an appeal that was intended to stall it.

The dispute over St. Joseph’s/Candler’s plans centers around its purchase and installation of a new 8-slice computed tomography equipment, known as a CT scanner. A spokesman for the Bluffton facility said Friday that the new scanner is not yet in use.

Such scanners are used for a diagnostic procedure that uses X-ray equipment to take cross-sectional pictures of the body, and can detect or confirm the presence of a tumor, show its size and location and guide a biopsy, among other functions, according to The National Cancer Institute.

“We’d like to thank the (DHEC) Board for their decision,” said Paul Hinchey, president and CEO of St. Joseph’s/Candler, in a statement Friday.

“As Bluffton grows, the quality health care residents have been receiving must grow with it. This decision will allow that to happen.”

Cherry-picking patients

What’s wrong with letting a hospital ramp up its services whenever it decides the demand exists? Don’t patients benefit from having more healing technology to choose from, rather than less?

It’s an issue that is closely regulated by state governments keen on keeping health care costs down and reducing duplicate services. Awarding CONs, which must comply with the most current State Health Plan, are how they do it.

A key benefit said Michael Tarwater, CEO of Carolinas HealthCare System in Charlotte, N.C., is that the regulation protects rural and community hospitals, facilities that provide a safety net to vulnerable populations.

Carolinas HealthCare System has more than 600 care locations throughout North and South Carolina. Its network includes academic medical centers, hospitals, health care pavilions, physician practices, destination centers, surgical and rehabilitation centers, home health agencies, nursing homes and hospice & palliative care.

CON requirements prevent others, such as niche providers who target only paying customers and lucrative services, from siphoning off the business that safety-net providers rely on to stay in operation, Tarwater said.

He stressed that he supports the free market, but when it comes to medical care, the dynamics are unique. Studies of states that got rid of their CON programs show “tremendous proliferation of a medical arms race,” he said.

The S.C. Hospital Association, a private, not-for-profit organization of about 100 member hospitals and health systems, released its 2012 report on the state CON program last month.

Its conclusion: “While CON is not a perfect system, it is the best approach available to protect community resources and safeguard access to care and quality of services.”

Opponents of the CON process, including some in the S.C. General Assembly, say when government limits the expansion of health services, it stifles free market forces and hurts competition between facilities.

Only about a dozen states, mostly in the West, do not have a CON program, according to the hospital association’s report.

But it states, “There is no competition for the uninsured.”

Hospitals have to serve everyone, regardless of patients’ ability to pay, while the government decides what to pay for care administered to Medicare and Medicaid patients.

And that’s a critical factor in South Carolina, where half of all children receive Medicaid, and 20 percent of the state’s population is covered by the program.

“The world without CON or a state without CON only works if you don’t care who gets hurt,” said Tarwater. “It would affect first and most deeply the very folks we’ve been trying to make sure had coverage and access.”

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